5 More Messy Money Mistakes and Quick Fixes
Farnoosh Torabi | MainStreet.com
To read part 1 of Five Messy Money Mistakes and Quick Fixes click here.
Few mistakes irk MainStreet more than those made with money. Good thing many messy money mistakes can be solved pretty easily. MainStreet rounded up some capital money managing minds to tell you what to do.
MISTAKE: Ignoring Bills
Even if you pay your bills online, you should still take a look at the paper copies before tossing them in the trash. A quick glance at your Verizon (VZ) bill may show you’ve been going over your minutes and paying extra every month. You could also catch extra promotions or gift offers.
THE FIX: Hire a Snail Mail Scanner.
If you’re out of town often, have a fear of paper cuts or just prefer doing everything online, Earthclassmail.com is one solution. It’s an online snail mail scanner that lets you view your mail as a PDF document. It then shreds or forwards your mail, upon request.
MISTAKE: Writing Checks
While the use of checks is declining each year, the Federal Reserve still recorded some 30 million check payments in 2006. We spend $22 billion on stamps each year, alone, according to the United States Postal Service. But that’s beside the point. “It’s not the money you spend doing them, it’s the reliance on snail mail and the exposure to possible theft that are the major downsides,†says Greg McBride of Bankrate.com.
THE FIX: Hire an E-Payer.
There are legitimate Web sites that keep tabs on your bills and help you e-pay. Check with your bank first, as it may offer a free service linking your bank account to creditors. Otherwise, comparison-shop for a third party bill payer. Checkfree.com is the chief middleman for online bill payments. Facebook users can also download the Pay Me application for free, which is powered by PayPal (EBAY), for peer-to-peer electronic payments.
MISTAKE: Buying Extended Warranties
An extended warranty is a cash cow for retailers. “At some stores, it’s most of their profit,†says Daugherty of Consumer Reports. Plus you rarely need to use these “protection plans†as electronics have become more reliable. “If they’re going to break, they’ll break during the original warranties,†says Daugherty. For example, just 10% of digital camera buyers needed a repair within three years, according to researchers at Consumer Reports.
THE FIX: The 90-Day Rule.
If the manufacturer’s warranty expires in just a few months, then that extended retailer warranty may be worth considering, depending on the reliability of the product and what the retailer’s warranty actually covers. Consumer Reports suggests getting an extended service warranty for Apple (APPL) computers, for example, because the tech giant only offers 90 days of free support. Products like three and four year-old computers, riding mowers and lawn tractors also need more repairs. If you think you might need more coverage down the road, Tod Marks, a senior editor at Consumer Reports, says you can sometimes buy additional protection directly from the manufacturer. “I’ve received solicitations from companies like Sears and Honda, giving me an ‘opportunity’ to continue coverage after the initial warranty expired,†says Marks.
MISTAKE: Mystery Spending
You hit the ATM five hours ago and already your cash is gone. Men are the worst at forgetting how they spent their cash. Visa (V) USA recently found men 34 and under lost close to 60 bucks a week, or a total of more than $3,000 a year. Women, meantime, lost an average $2,700 a year on miscellaneous purchases.
THE FIX: Watch For a Week
While some traditional financial experts preach keeping a strict budget and writing down monthly purchases to learn your spending habits, that’s not practical. David Bach, author of Go Green. Live Rich, says seven days of tracking should be enough monitoring. “It’s an honest snap shot of how you spend money,†says Bach. “The key is to not change the way you spend money. Don’t become a better person on the third or fourth day.†In his research, Bach has found that on average many people spend 50% more a day than they actually think they’re spending. Sites like Bach’s automaticmoneymanager.com and mint.com can help track your spending, too.
MISTAKE: Not Giving Enough To Charity.
Your housing and car payments are eating up most of your disposable income, leaving you with little to no money to donate to your favorite charities. Besides the tax benefits, giving brings good karma.
THE FIX: Donate on Autopilot.
Determine how much you can contribute weekly, monthly or annually, and then look for qualified charities on justgive.org or guidestar.com. You can have a specified amount deducted automatically every month directly through the charity, or through sites like networkforgood.org/donate and guidestar.org. Also, American Express’s (AMEX) GivingExpress program awards points for being charitable. Visit americanexpress.com/give for more information.
ANOTHER FIX: Be a Venture Capitalist.
There are a growing number of social entrepreneurship sites like kiva.org, microplace.com and villagebanking.org that link business owners in developing countries with individual lenders. However, you can’t deduct part of this charitable giving from your taxes, because it’s technically recorded as a loan. But you can earn interest, “and you get to see who you’re helping directly online,†says Bach.
